FTSE 100 Stock Picks
Playing “Footsie” and drinking tea has never felt better! Until we decided to launch U.K. shares on the Easy platform, that is, which makes my cup of Earl Gray taste even sweeter.
Yes, you guessed right, EasyVSTRs! Our investment universe got a lot bigger with our new EasyGBP wallet, which includes some favorite FTSE 100 shares and a whole bunch more on the horizon, so check it out!
Backdrop
The Financial Times Stock Exchange 100 Index (FTSE 100), or just "Footsie," is a share index of the 100 largest companies by market capitalization listed on the London Stock Exchange (LSE). The FTSE 100 is the most widely used U.K. stock market indicator and is maintained by the FTSE Group, a subsidiary of the London Stock Exchange Group.
Let’s take a look at 5 of the FTSE 100's largest listings by market capitalization:
Shell PLC (SHEL)
The energy and petrochemical company Shell PLC needs no introduction and takes the top spot as the largest company on the FTSE 100. Shell has a market cap of £ 173 billion, and its share price has gained nearly 69% over the last year, mainly thanks to rising commodity prices.
The energy giant’s latest report card showed its highest ever quarterly profits thanks to soaring oil and gas prices around the globe due to the Russian invasion of Ukraine. Shell nearly tripled its profit in the first three months of the year compared to the same period a year ago but also mentioned it selling its Russian investments cost the company £ 3.1 billion.
Near-term factors to keep an eye on that could affect the share price are prolonged geopolitical tensions, affecting the oil market, and leaving a supply hole in Europe. Other factors like increased taxes and spending, Shell's committed investment into the U.K. towards "green tech," and activists trying to break up the oil giant should be on the investor's radar.
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AstraZeneca PLC (AZN)
AstraZeneca, the biopharmaceutical company, has led the charge to vaccinate the globe against COVID-19 and has become a household name. The pharma company’s share price has gained over 80% in the last three years and holds the second spot on the FTSE 100 Index.
AstraZeneca announced its Q1 2022 results at the end of April, which showed robust growth across its strategic objectives. Total revenue soared a staggering 60% in the first quarter, helped by strong demand for rare disease medicine and Covid-19 vaccines. Operating margin in the quarter benefitted from the phasing of costs, and core EPS increased 20%.
As COVID-19 vaccine makers shift their focus to vaccine boosters, the pharma money machine should print sterling like there is no tomorrow. AstraZeneca's outlook and guidance for the year are cautiously optimistic, with a high teen percentage of revenue expected.
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HSBC Holdings PLC (HSBA)
London-based, established in 1865 in Hong Kong, what a legacy! HSBC Holdings PLC has become one of the world's largest banks and financial institutions around the globe. It rounds up third place on the FTSE 100 and has an impressive market capitalization of £ 97.24 billion.
Today, HSBC provides banking and financial services to over 40 million customers across the globe, with its two key markets being the United Kingdom and Hong Kong. Traditionally, the financial sector should do exceptionally well in a rising interest rate environment, but HSBC recently reported that the geopolitical turmoil and higher inflation had curbed profits.
The share price has gained around 30% in the last year as rumors that the bank's largest shareholder is proposing a breakup of the bank's Asian operations. Another headwind for the bank as it turned its focus onto its Asian business is the never-ending Covid-19 pandemic lockdowns and the economic growth slowdown in China.
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Unilever PLC (ULVR)
Did you say personal brands? This multinational diversified individual product company has loads of them, and yes, it's non-other than the consumer goods giant, Unilever PLC.
This consumer staple boasts a market cap of £ 94.3 billion and an impressive product range that could see it through a possible pending recession. If consumers continue to buy daily essentials like soap and cleaning products, well, 'that is if consumers continue to purchase everyday essentials like soap and cleaning products. Their household brands include Knorr soups and sauces, Lipton teas, Axe and Dove skin products, and the TRESemme haircare brand.
Despite the highly challenging environment, considering Unilever generates most of its income from emerging markets, the company still posted decent first quarter 2022 results. The company’s underlying sales and turnover increased by 7.3% and 11.8%, respectively, and it is also committed to keeping investing in its top brands, which grew by 8% in the quarter. The consumer brands giant also reached the first €750 million tranches of its share buyback program and retained its quarterly dividend of €0.4268 per share.
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Diageo PLC (DGE)
“A brand for every taste and celebration big and small," The brand slogan says it all, and the world’s leading producer of branded premium spirits, Diageo, is one to watch.
Diageo's renowned brands include Johnnie Walker, Smirnoff vodka, Captain Morgan rum, Baileys Irish Cream, and Guinness. The company also owns around 34% of champagne and cognac maker Moet Hennessy, a subsidiary of French luxury goods maker LVMH Moet Hennessy-Louis Vuitton.
Recession fears and current market conditions could be risky for consumer goods businesses as spending budgets could come under pressure. But Diageo could weather the storm with its wide range of products which caters to different income groups. The company invested heavily in premium labels like Johnnie Walker, which helped maintain profit margins. Its premium drinks were responsible for more than half of net sales growth between July and December.
Despite the Oracle of Omaha losing interest and selling his stake, the current geopolitical tensions also weighed in on Diageo's share price, which is down 11% year-to-date. But sales are growing, and the company's interim results for fiscal 22 showed strong growth across all key financial metrics.
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Round-up
Despite all the doom (War) and gloom (Recession fears), investment opportunities are always around us, which just got a lot better thanks to our new FTSE 100 share additions and we have a couple of U.K ETFs inbound shortly. Diversification across different markets could be key in this changing economic environment, so stay informed.
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Sources –EasyResearch, London Stock Exchange, Shell PLC, BBC, AstraZeneca PLC, Reuters, Financial Times, Diageo PLC, Koyfin.
Follow Barry Dumas
@BEEF_FINMARKETS
Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
